Take Home Activity 2 to be submitted on March 6, 2023.

➢ On your YELLOW SHEETS, show your computations in good form. Use the front page only.
➢ Use PERMANENT ink only. The use of erasable ink is also prohibited.
➢ Use correction tape or fluid for any erasures.

Large Company purchased 75% of Small Company on January 01, 20x4, for P600,000, when
the statement of financial position for Small showed common shares of P400,000 and Retained
Earnings of P100,000. On the date, the inventory of Small was undervalued by P40,000, and a
patent with an estimated remaining life of 5 years was overvalued by P70,000.

Small reported the following subsequent to January 1, 20x4:

YEAR NET INCOME DIVIDENDS PAID

20x4 P 80,000 P 25,000
20x5(loss) (35,000) 10,000
20x6 90,000 40,000

A test for goodwill impairment on December 31, 20x6, indicated a loss of P19,300 being
recorded for 20x6 on the consolidated income statement.

Large uses the cost method to account for its investment in Small and reported the following
for 20x6 for its separate-entity statement of changes in equity:

Retained Earnings, Beginning P 473,500

Net Income 200,000
Dividends (70,000)
Retained Earnings, Ending P 603,500

Requirements: Partial and Full Goodwill Approach (Cost model) for 20x4, 20x5, and 20x6:
1. Journal Entries
2. Amortization Schedule
3. Eliminating Entries
4. Consolidated Retained Earnings, Ending Balance
5. Consolidated Net Income – Parent
6. Consolidated Net Income – Total
7. Non Controlling Interest in Net Income
8. Non Controlling interest, Ending Balance

Additional Information:
Retained Earnings of Large on January 1, 20x4 amounted to P473,750
The Net Income of Large: 20x4 P100,000
20x5 P150,000
20x6 P200,000
Dividends Paid by Large: 20x4 P40,000
20x5 P50,000
20x6 P70,000